Monday, February 19, 2007
Globalization...who benefits?
In short...all nations should benefit from a global economy. Nations, much like people, all have unique attributes or competitive advantages. Some nations have specific natural resources such as oil or iron, while others educate and yet others manufacture things. Where practice fails to mirror theory, is when governments create trade barriers, whether via subsidies or tariffs, that alter the consumer benefits competitive advantages offer.
Case in point: Affordable Japanese housing is less available simply because their government continues to subsidize the growing of rice. The Japanese government has made the decision that domestic rice production takes a front seat to housing. The result here is that an army of small rice growers cultivate land that could be used to increase their housing stock. Rice could alternatively be imported at a price less than what Japanese consumers currently pay simply because other countries have the resources to be more efficient producers of rice.
What rice is to Japan, sugar is to the United States and this is to say that most countries have erected barriers that alter many nations' competitive advantages. While most nations ought to benefit from a global economy, those benefits are significantly diminished by barriers to trade.
In short...all nations should benefit from a global economy. Nations, much like people, all have unique attributes or competitive advantages. Some nations have specific natural resources such as oil or iron, while others educate and yet others manufacture things. Where practice fails to mirror theory, is when governments create trade barriers, whether via subsidies or tariffs, that alter the consumer benefits competitive advantages offer.
Case in point: Affordable Japanese housing is less available simply because their government continues to subsidize the growing of rice. The Japanese government has made the decision that domestic rice production takes a front seat to housing. The result here is that an army of small rice growers cultivate land that could be used to increase their housing stock. Rice could alternatively be imported at a price less than what Japanese consumers currently pay simply because other countries have the resources to be more efficient producers of rice.
What rice is to Japan, sugar is to the United States and this is to say that most countries have erected barriers that alter many nations' competitive advantages. While most nations ought to benefit from a global economy, those benefits are significantly diminished by barriers to trade.
Labels: Economic Globalization
